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Canada’s Small Business Minister is resisting pressure to give businesses more time to repay loans made by the government during the pandemic, despite warnings from a lobbying organization that 250,000 businesses are at risk if she doesn’t.
Rechie Valdez, who took office in July, said the government has shown flexibility by pushing back the deadline several times and providing billions of dollars to small businesses.
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“I don’t think we’re giving small businesses enough credit. They’re unbelievably resilient,” she said in an interview in her Ottawa office.
Nearly 900,000 small and medium-sized businesses took out loans of up to $60,000 from the Canada Emergency Business Account following the COVID-19 economic crisis. The government has disbursed a total of $49 billion under this program.
The program is designed to have up to $20,000 of the loan forgiven if the remainder is repaid through the end of 2022. This deadline has been extended until the end of this year and then to January 18, 2024.
The Canadian Federation of Independent Business says up to 250,000 small businesses are at risk of bankruptcy if they miss the deadline and lose the reimbursable portion. There are 1. 2 million businesses with paid staff in Canada and the average number of small businesses ends each year. about 90,000 before the pandemic.
“This could turn into a bloodbath,” said CFIB President Dan Kelly.
After Jan. 18, CEBA loans, which are currently interest-free, will be switched to term loans at a rate of five percent, with full repayment due by the end of 2026. But Kelly said many small businesses operate “so close to the line” that wasting the forgivable game would be catastrophic and needs an extension.
Canada has experienced some of the longest COVID-19 lockdowns in the world, and businesses have struggled to get by amid inflation and peak interest rates. The CFIB Business Barometer, which measures small business confidence, is at its lowest point since April 2020.
Kelly added it was “embarrassing” that the government was encouraging companies to take out bank loans to pay off their CEBA debt. “It’s like telling a cash-strapped Canadian family that if you can’t pay your Visa bill, just take out a Mastercard and pay it off.”
Canada’s Parliamentary Budget Officer has estimated that extending the deadline to the end of next year would cost the government $907 million.
The government has invested billions in small businesses and will continue to be there for them, Valdez said. He highlighted Canada’s Business Benefits Finder, which allows owners to search a database of approximately 1,500 federal, provincial and territorial supports and locate the systems for which they are eligible. for.
“I recognize that we are not completely out of danger either. I am not naive,” she added. “I need small businesses to know that we have other features to get us through these difficult times. “
Valdez has private experience in small businesses, having launched her own candy and dessert business after more than 15 years at the Bank of Montreal, where she worked as a corporate banker.
She stressed that the reason Trudeau established a standalone role as small business minister — previously, it was part of Trade Minister Mary Ng’s portfolio — was to give it the attention it deserves. “I’m actually really grateful that not only did he give me the opportunity, but really to put that laser focus on small businesses.”
— with Erik Hertzberg’s.
Bloomberg
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